What Would Happen to Aggregate Demand If the Federal Government

question 202

Multiple Choice

What would happen to aggregate demand if the federal government increased military purchases and state and local governments decreased their road building budgets at the same time?

• A)​AD would increase, because only federal government purchases affect AD.
• B)​AD would decrease, because only state and local government purchases affect AD.
• C)​AD would increase if the change in federal purchases were smaller than the change in state and local purchases.
• D)​AD would decrease if the change in federal purchases was smaller than the change in state and local purchases.

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Definitions:

Parathyroid Hormone

A hormone produced by the parathyroid glands that regulates calcium levels in a person’s body.

Calcium Release

The process by which calcium ions are released from cellular storage sites, playing a critical role in various physiological functions.

Formal Authority

The power granted to an individual within an organization through their position, allowing them to make decisions and enforce rules.

Accountability

The obligation to be answerable for one's actions, ensuring responsibility is accepted and mistakes are rectified.